Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Interim Rule

SYNOPSIS: The Federal Acquisition Secretariat is issuing FAC 2001-27 to amend the Federal Acquisition Regulation (FAR) to allow the purchase of products from Australia and Morocco without application of the Buy American Act if the acquisition is subject to a Free Trade Agreement (FTA). Also, this interim rule establishes a table of services excluded from the coverage of the various trade agreements; corrects the threshold for Canadian services; revises the list of "Least Developed Countries" (LDCs), revises how the FAR uses the terms "designated country" and "Trade Agreements Act"; and revises the FAR clauses that apply the Buy American Act and trade agreements to construction material to correct the definition of "cost of components."

DATES: The effective date of this interim rule is January 1, 2005. Comments on the interim rule must be submitted on or before February 28, 2005.

In addition, this interim rule makes the following changes to the FAR related to foreign acquisitions:

Paragraph (b) of FAR 25.402, General, is revised to correct the North American Free Trade Agreement (NAFTA) threshold for services from Canada from $25,000 to $58,550.

FAR 25.400, Scope of Subpart, stated that FAR Subpart 25.4 provided "policies and procedures applicable to acquisitions that are subject to...the Trade Agreements Act (the Agreement on Government Procurement, as approved by Congress in the Trade Agreements Act of 1979...)." However, the Trade Agreements Act (TAA) is not synonymous with the "World Trade Organization Government Procurement Agreement" (WTO GPA). The TAA provides authority for the president to waive discriminatory purchasing requirements (such as the Buy American Act), designate eligible countries (including LDCs, see below), and prohibit procurements from non-designated countries. It does not contain thresholds or the terms of the various trade agreements. Therefore, the term "World Trade Organization Government Procurement Agreement" is substituted for the term "Trade Agreements Act" wherever in the FAR the term is used to mean the WTO GPA.

FAR 25.003, Definitions, identified WTO GPA countries and certain LDCs for which the U.S. Trade Representative (USTR) has waived discriminatory purchasing requirements as “designated countries” (the president has delegated his authority under the TAA to the USTR). This rule redefines “designated country” as including WTO GPA countries, FTA countries, LDCs, and Caribbean Basin countries (FTA countries and Caribbean Basin countries are added as designated countries). Each of these terms retain a separate definition because, in some instances, a particular regulation may not apply to all designated countries, but only some of the specific subsets.

The list of LDCs in FAR 25.003 is revised at the request of the USTR. The list of LDCs were included in the definition of "designated country." Title 19 of the U.S. Code, Section 2518 (19 U.S.C. 2518) defines LDCs as "any country on the United Nations General Assembly list of least developed countries." Botswana was included as a "designated country" in FAR 25.003 because it was an LDC, but it is no longer designated as an LDC by the United Nations, so it is removed from the list. Also, the following countries have been designated as LDCs by the United Nations, but were not included in FAR 25.003: Afghanistan; Angola; Burma (Myanmar); Cambodia; Democratic Republic of Congo; Eritrea; Ethiopia; Laos; Liberia; Madagascar; Mauritania; Senegal; Solomon Islands; Sudan; East Timor; and Zambia. Therefore, the USTR has requested that these additional LDCs be included in FAR 25.003, with the exceptions of Burma (Myanmar), Liberia, and Sudan, which are subject to U.S. economic sanctions. The new definition of LDCs in FAR 25.003, FAR 52.225-5, Trade Agreements, and FAR 52.225-11, Buy American Act -- Construction Materials under Trade Agreements, reflect the USTR’s request.

Under the Caribbean Basin Trade Initiative, the USTR has determined that "products" of the listed Caribbean Basin countries are to be treated as "eligible products." This rule modifies FAR 25.405, Caribbean Basin Trade Initiative, to include "construction material" as an "eligible product," and modifies FAR 52.225-9, Buy American Act -- Construction Materials, FAR 52.225-11, Buy American Act -- Construction Materials under Trade Agreements, and FAR 52.225-12, Notice of Buy American Act Requirement -- Construction Materials Under Trade Agreements, to extend nondiscriminatory treatment to all designated country construction material, including Caribbean Basin country construction material.

A technical correction is made to the definition of "cost of components" in FAR 52.225-9 and FAR 52.225-11. When applied to components of construction material, the definition is modified to delete the term "end product" and replace it with "construction material." (EDITOR'S NOTE: The definition of the term "component" in these clauses already says "construction material.")

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.